Stitution c) A consumer has an income of C50. He can choose any combination of productX
and product Y for consumption. If price of X (Px) is C5 and price of Y (Py) is C2.50
i.
Graph the budget line of the consumer.
ii. Find the market rate of substitution.
iii.
What is the maximum quantity of Y that he can purchase? Show how it
changes when the price of good X decreases from C2.50 to C2 If the income
goes up to €75, then how will the budget line change?
iv.
Find the maximum quantity of Y that he can purchase with the new budget,
(5 mark)

Why is the cournot equilibrium an​ equilibrium? a. there are​ short-run barriers to exit in a cournot​ duopoly, so both firms cannot alter their output levels. b. given the other​ firm's level of​ production, both firms are maximizing profits and cannot improve their situation by unilaterally altering their level of output. c. both firms operate at zero profit under a cournot​ equilibrium, so they would face negative profits if they change output. d. both firms operate at minimum​ long-run average cost under a cournot​ equilibrium, so changes to output would reduce​ long-run profits. even if they​ can't collude, why​ don't firms set their outputs at the joint​ profit-maximizing levels​ (i. e., the levels they would have chosen had they​ colluded)? a. given that other firm produces at the collusive​ level, a firm could increase their own profits by increasing output above the collusive level. b. the midpoint of the collusion curve​ (i. e., the collusive​ outcome) lies below the reaction​ curves, so both firms have an incentive to increase output under the cournot duopoly. c. both a and b are correct d. both a and b are incorrect